I'm not saying the ENTIRE Horde and the ENTIRE Alliance will merge. I'm merely posing that individuals might be able to swap there primary faction. So Timmy 1 can go Horde as a gnome to play with friends and Timmy 2 can go alliance as a goblin. You would still have the general 'Horde vs Alliance' but individuals may choose to align there allegiance. Similar to pandas.

I think it's more likely they are allowing any individual character (Horde or Alliance) to play with the opposing faction.

Sometime ago, before Cata as it was suppose to go live with the Expac, they said they were toying with the idea of you abandoning your faction and so you would see Humans rolling in Org or trolls pvping with Nelfs. But it never went live. Now that they tested this with pandas, you get to choose which side you represent, and Wrathion during the legendary dialog talking about an Azeroth coming together to fight what's to come (I can't remember his exact words).

This Expac is themed around togetherness and finding peace within. I'm pretty sure the new thing will be a united faction, choose which side to hero for regardless of race.

''Virtual Realms are coming, which will essentially merge realms. This will allow you to keep playing on your current realm, but trade with and do arenas, raids, and dungeons with people in your realm group, as well as use a merged Auction House.''